Govt unable to pack up backpacker tax

The government originally wanted backpackers picking fruit in farms across the country to pay taxes at the rate of non-residents at 32.5 per cent for every dollar earned but has cut it to 19 per cent.

SO WHAT'S THE BIG DEAL

Farmers are worried the 32.5 per cent rate would drive away the labour they need for harvest season. No workers could mean spoilt fruit and higher prices at the supermarket.

The problem has been compliance with backpackers self-assessing and claiming to be residents, thus minimising their tax or not paying any at all.

WHAT'S HAPPENED SO FAR

Labor and independent senator Jacqui Lambie teamed up to cut the rate to 10.5 per cent, saying it's better for farmers. It passed the Senate, but the government used its numbers in the House of Representatives to reject it.